U.S. nonprofit organizations experienced significant
fiscal stress over the past year but still managed to
increase services and boost revenue, according to a new
report by the Johns Hopkins Center for Civil Society
Studies as part of its Nonprofit Listening Post Project.

Surveying a nationwide group of nonprofit agencies in
five fields, the Johns Hopkins survey is the most
comprehensive effort to date to document the actual effects
of recent economic weakness and government budget cuts on
the nation's charitable organizations and those they serve,
and to assess how the organizations have responded.

The survey focused on organizations serving children
and families, community and economic development, the
elderly and the arts.

"What this survey shows is that American nonprofits
have become highly entrepreneurial organizations,
responding actively and often creatively to new fiscal
pressures," noted Lester M. Salamon, who directs the Johns
Hopkins Listening Post Project. "At the same time, it makes
clear that those pressures are exacting a toll."

Bob Jones, president of Children's Aid and Family
Service of Paramus, N.J., said, "This is not a dip; it is a
sea change. We can't simply sit idly and hope it will go
away."

Nearly 90 percent of the surveyed organizations
reported some degree of fiscal stress over the past year,
and more than half described that stress as "severe." Yet
the vast majority of these agencies managed to boost their
income, and nearly two-thirds reported increased activity
in response to growing demand. To accomplish this,
organizations said they employed multiple strategies,
combining new initiatives with defensive belt-tightening
and aggressive advocacy. Among the major responses:

New funding initiatives.
Four out of five respondents reported expanded private
fund-raising efforts, and nearly 84 percent reported
increased marketing and fees.

New program initiatives.
More agencies reported expanding programs, broadening their
reach and speeding up innovations than reported cutting
back in these areas.

Belt-tightening. At the
same time they have taken on new initiatives, organizations
have sought ways to cut costs. Over half reported freezing
salaries, decreasing benefits or increasing staff hours.
More than 70 percent reported postponing hiring,
eliminating vacancies or increasing reliance on part-time
staff.

Tapping reserves. Over half
the respondents reported dipping into reserves and
endowments, selling real estate or other assets and/or
borrowing in the hope of future gains.

Collaboration.
Organizations turned increasingly to collaborations and
partnerships, with more than half citing this as a strategy
for coping with fiscal distress.

Expanded advocacy. Agencies
took proactive actions to avoid the cuts with two-thirds
reporting implementing or expanding their advocacy
activities.

These coping strategies have not been without their
costs, however. A number of respondents reported increased
tension as staff attempted to get more work done with fewer
resources. Some worried that salary and benefit cuts would
hinder the ability to recruit competent and professional
staff. Even more seriously, nonprofits found it necessary
to pay more attention to survival than to the special
qualities that make them distinctive, such as serving those
least able to pay.

The Listening Post Project is a collaborative
undertaking of the Center for Civil Society Studies at the
Johns Hopkins Institute for Policy Studies, the Alliance
for Children and Families, the Alliance for Nonprofit
Management, the American Association of Homes and Services
for the Aging, the American Association of Museums, the
National Council of Nonprofit Associations, the National
Congress for Community Economic Development and the Theatre
Communications Group. Support for the project has been
provided by the Carnegie Corporation of New York, the Ewing
Marion Kauffman Foundation, the Rockefeller Brothers Fund
and the Surdna Foundation.